Sporadic commentary on the telecoms and IT market in Latvia and the Baltic States.

Thursday, February 28, 2008

TeliaSonera offers, yet again, to buy, split Lattelecom

TeliaSonera sent a letter to the Latvian government dated February 25 offering, yet again, to buy all remaining state shares in Lattelecom and mobile operator LMT for LVL 500 million, but promising to split the fixed network operator into a wholesale and a retail operation.The wholesale operator would offer network services to all other operators, including LMT and the Lattelecom retailer, on equal terms under strict regulatory supervision. Telia, the Swedish unit of the group, earlier founded a seperate network wholesaler under the Skanova brand it used previously for selling such services.The Swedish telecoms group apparently sweetened the deal in the letter by saying it would also base some of its research and development (R&D) operations in Latvia if the transaction went through. This blogger was allowed to read a copy of the letter by informed sources.The letter, signed by Kenneth Karlberg, TeliaSonera's head of Mobility who has been conducting negotiations with the Latvian government for several years, also states that "selling our stake in Lattelecom is not a solution we prefer and if it is the only way we would appreciate your detailed suggestion on how such a transaction would be structured." This would be done in the context of getting 100 % control of Lattelecom, where TeliaSonera now directly or indirectly holds just over 60).Karlberg also tries to sooth concerns by the Latvian government that ownership of both companies by TeliaSonera would dampen competition. "In all the markets where TeliaSonera is active, there is no evidence of lacking competition, " he writes, adding that telecommunications services prices offered by the Swedish group's subsidiaries were "among the lowest in Europe".Lattelecom could be considered a company in crisis since its CEO, Nils Melngailis resigned under what was, in effect, political pressure. If acquired quickly by TeliaSonera, Lattelecom would probably get a new top manager appointed from Stockholm.

Well, there this alias "verslo tinklas" again. Enough sould once be enough. Repeatedly Telia-Sonera has been accused of corruption without even a sign of something that comes close to evidence. This is nothing else than a personal vendetta against Telia-Sonera by -my guess- a loser that lost it all and now blames Telia-Sonera for that.

I am very interested to hear more about Telia-Sonera's business methods in details, but then with substantial evidence that can be verified. You bet their god is profit! Would anyone expect them to be a philanthropic institution that -just for instance- helps Lithuanian losers to survive in the big-big world? No way. Telia-Sonera for sure wants to dominate and dictate the market they are acting on. That is what business is about. Sometimes sad, but often true.

I have to admit that the competition thing in Karlbergs letter therefor is really funny. Here in Sweden their prices are definitely not among "the lowest in Europe" and the one market they really tried to be the cheapest ended in a total disaster (their mobile adventure in Denmark). So, no, I don't think Karlberg did himself or Telia-Sonera a favor by addressing the competition subject. No one believes it and anyone can figure out that they want both Lattelecom and LMT because of their rather dominating position(s) on the Latvian telecom market.

Besides, Karlberg should also have understood that low prices will scare latvian politicians. Give it a second thought, less profit potentially means a lower or even non-existing budget for bribing. Knowing that with a couple of Lembergs stipendiums in their back pockets there should be no risk for Lattelecom ending up as a part of Telia-Sonera (nor is their a risk that this would happen to LMT).